Skywater Technology Inc ((SKYT)) has held its Q4 earnings call. Read on for the main highlights of the call.
SkyWater Technology Inc. recently held its earnings call, revealing a generally positive sentiment driven by strong financial performance in Q4 2024 and throughout the year. The company showcased significant revenue growth and strategic expansions, notably the acquisition of Fab 25. However, challenges in the Wafer Services segment and conservative growth forecasts for 2025 due to external factors affecting government contracts were also highlighted.
Strong Financial Results for Q4 2024
SkyWater Technology reported impressive financial results for the fourth quarter of 2024, with total revenue surpassing $75 million and a gross margin nearing 27%, exceeding expectations. The earnings per share (EPS) for the quarter stood at $0.04, contributing to a positive full-year EPS of $0.06 for fiscal 2024.
Record Full Year Revenue
The company achieved record full-year revenues of $342 million, marking a 19% increase from fiscal 2023. The Advanced Technology Services (ATS) business was a significant contributor, delivering a robust 13% revenue growth compared to the previous year.
Expansion in Aerospace and Defense
SkyWater has strengthened its position in the aerospace and defense sectors, establishing itself as a trusted provider of domestic semiconductor capabilities. This expansion reflects significant end-market strength in these areas.
ThermaView Solutions Launch
In a strategic move, SkyWater introduced ThermaView Solutions, entering the thermal imaging market with support from Raytheon Vision Systems. This launch marks a new venture for the company, expanding its technological offerings.
Fab 25 Acquisition
The acquisition of Infineon’s Fab 25 in Austin is a major milestone for SkyWater, expected to contribute approximately $300 million in annual Wafer Services revenue. This acquisition is set to enhance the company’s U.S. manufacturing capabilities significantly.
Decline in Wafer Services Revenue
Despite the overall positive performance, the Wafer Services segment experienced a significant decline due to prolonged weakness in the automotive and industrial sectors, presenting a challenge for the company.
Conservative Revenue Outlook for 2025
SkyWater has adopted a conservative revenue outlook for 2025, anticipating modest year-over-year growth in ATS and Wafer Services. This cautious stance is attributed to ongoing federal budget negotiations impacting government contracts.
Q1 2025 Revenue Guidance
The guidance for Q1 2025 is conservative, with expected revenue ranging from $59 million to $63 million. This reflects the impacts of continuing resolutions on ATS revenues, indicating a cautious start to the year.
Forward-Looking Guidance
Looking ahead to 2025, SkyWater expects combined ATS and Wafer Services revenue growth of approximately 5%, plus or minus 2%, compared to $266 million in 2024. The company anticipates tools revenue of around $30 million, primarily in the second half of the year. Gross margins for the combined business are expected to expand into the 30% range in the second half, resulting in high 20s for the full year. SkyWater plans to maintain operating expenses within a 10% to 15% increase over the previous year, aiming for slightly positive non-GAAP EPS and strong adjusted EBITDA of at least 10% of total revenue.
In conclusion, SkyWater Technology Inc.’s earnings call painted a picture of robust financial health and strategic growth, tempered by challenges in specific segments and a cautious outlook for 2025. The company’s strategic expansions and record revenues underscore its potential, while its conservative guidance reflects the uncertainties in the broader economic environment.
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